General secretary of trade union Solidarity Gideon du Plessis vowed to pursue President Jacob Zuma’s legal advisor Michael Hulley in his personal capacity for the significant debts of Aurora Empowerment Systems.
Du Plessis spoke on Thursday outside the North Gauteng High Court after a ruling by Judge Eberhard Bertelsmann that the Aurora directors may be held personally liable for the money owed by Aurora to Pamodzi Gold.
These respondents were former president Nelson Mandela’s grandson Zondwa Mandela, who was the managing director of Aurora, President Zuma’s nephew Khulubuse Zuma, who was board chair, director Sheshile Thulani Ngubane and the father and son team Sulliman and Fazel Bhana who were managing the daily operations.
Hulley was on the board briefly.
The ruling comes after Aurora made offers to buy gold mines from Pamodzi late in 2009. The transaction went horribly wrong as Aurora failed to perform in terms of the agreements. Aurora, at the same time, entered into an agreement to manage the mines until it took ownership. This resulted in the stripping of mine assets and the selling of gold contrary to the terms of the agreement. Miners were not paid their salaries and wages and Aurora failed to meet its environmental obligations.
As a result the liquidators of Pamodzi applied for a declaratory order in an effort to hold the respondents personally liable for Aurora’s debts to Pamodzi. This order was granted on Wednesday.
Du Plessis said it was clear from the judgement that Hulley played an active role in the events. Solidarity, that represents some of the miners who have been left desititute, will engage the provisional liquidators to pursue an order that Hulley will also be held personally liable for the debt.
Bertelsmann distinguished between Zuma and the other directors in his ruling. Zuma, he said, was not involved in the drafting of the bids in September 2009, but must have been aware of Aurora’s problems from November 2010.
He said the others must have been well aware that material misrepresentations were made in the bid documents. These include an undertaking to raise R200 million on the JSE through a listed company Aurora was said to own, that Aurora bought the biggest saw mill in the Southern Hemisphere and was a global player in the saw milling industry, that it was well resourced and had a firm investor in a Malaysian company called AME.
He said the assertions in the bid documents had no basis in reality. Aurora had done virtually no business and had no money of its own, except amounts borrowed from family members. It had no experience in mining and was not well resourced. It was in fact insolvent from the moment the offers were accepted and never recovered from that position, Bertelsmann said.
He said the directors never put in a cent of their own money, with the exception of Zuma that paid R35 million at a later stage on the insistance of Solidarity.
“The entire project remained a pipe dream with disastrous consequences. They should have known it would create havoc in the lives of the miners,” Bertelsmann said. The directors, however, had blatant disregard for the hardship of the workers and acted recklessly, he said.
He said the directors did nothing to alleviate the plight of the miners, save to seek other funding from outside. The deteriorating condition of the mines made the chance of finding a “fairy godmother” (a new funder) increasingly slim, he said.
The directors should have acted to limit further losses by ending the agreement in March 2010, even if it meant selling the mines on auction, Bertelsmann said.
He ruled that the other directors will be held jointly and severally liable for Aurora’s debt to Pamodzi in their personal capacity, right from the outset of the dealings between the two companies.
Zuma will be held equally liable, but only from December 1, 2009.
Du Plessis said Solidarity will drive the recovery of the money, the final amount which still has to be detrmined, and see to it that the first payments will be made to the miners. If the directors cannot pay the full amount, they will be sequestrated, Du Plessis said.
He said the maximum payment individual mine workers are entitled to in terms of the Insovency Act is R28 000, but the union hopes there will be some money left to make further payments to them.
After five years there is hope for the workers again and they can move on. The rule of law has prevailed, Du Plessis said.
“We are pleased with the judgment and our trust in the rule of law has been restored. Today proved that those with strong political ties are indeed not above the law. We are, however, particularly grateful for the sake of the former Aurora workers. While nothing can compensate them for the losses they have suffered, and although further legal processes have to follow before the money can be collected, this judgment at least brought justice for them. Furthermore, another court application against the controversial Bhana family for other irregularities still has to be heard,” Du Plessis said.
National Union of Mineworkers (NUM) deputy president Joseph Montisetse welcomed the judgement, but criticised the delay in getting justice for the workers. “We went to parlaiment to the portfolio committee on minerals three times, but there was never an intervention. That is disappointing,” he said.
He said by stripping the mines of crucial infrastructure the Aurora directors created permanent unemployment, as no investor will now finance the ruined mines.
Khulubuse Zuma’s spokesperson Vuyo Mkhize said Zuma has to study the ruling, but may appeal the earlier interlockutory ruling dismissing Zuma’s argument that the application could not succeed as the claim was unquantified.
He also said the court did not take into account Zuma’s efforts to alleviate the problems and the fact that, contrary to the actions of the other directors, he put R35 million of his own money into the business and never took out one cent. Another court may come to a different decision, he said.
Read the full Aurora judgment here: Engelbrecht & 3 Others v Zuma & 4 Others – Aurora Judgment – Bertelsmann, J – 2015-06-25
Listen to Judge Bertelsmann’s ruling below: